Novell Completes SUSE Acquisition, Details Indemnification Program

Novell on Tuesday completed its purchase of SUSE, offered a indemnification program, and extended its Unix intellectual property claims as it continues its move from NetWare to Linux.

As expected, Orem Utah-based Novell Inc. on Tuesday completed its purchase of German Linux powerhouse SUSE Linux AG. On the same day, Novell announced an indemnification program for SUSE Linux 8 customers, who sign an upgrade protection and a qualifying technical support contract, against possible legal actions and clarified its claims to Unix intellectual property.
Novell is paying $210 million in cash for SUSE. This move also opens the door for IBM to complete a $50 million investment in Novell that was announced in November. Industry observers expect this will bring the continued support of SUSE LINUX on IBMs eServer line and to provide for future joint product and marketing-support arrangements.
Novell officials were very bullish about the companys jump into Linux. In a statement, Jack Messman, chairman and CEO of Novell, said: "Combining Novells global presence and deep knowledge of enterprise software with SUSE Linuxs powerful technology makes Novell one of the strongest options for enterprise Linux literally overnight."

Messman added that this move has been customer driven.

"Novells customers have long asked us to back Linux with our great networking software and technical support system. Now were going even furtheroffering one of the top Linux distributions on the market. Customers interested in deploying Linuxwhether in the data center or on the desktopcan now turn to Novell to get what they need."
SUSE will become a product business unit within Novell. SuSEs sales and marketing will be handled by Novells existing geographic business units as well as SUSE current staff. The SUSE brand will continue, officials said.
On the engineering side, SUSE will retain its structure within Novell, as did open-source company Ximian when Novell acquired it in August 2003. Richard Seibt, SUSEs former CEO will join Novell and continue to manage SUSE as its president.

Meanwhile, officials said both Novell and SUSE will devote more effort to promote Linux adoption and integration across Novells product lines.
According to Messman, "With SUSE LINUX and Ximian, we gain some of the best open source developers in the market, and we want to leverage those capabilities in our development efforts across the entire product line."
Bill Claybrook, vice-president of Linux strategy for the Harvard, Mass.-based analyst house Harvard Research Group Inc., said that the completion of the acquisition is good news for Novell.
"Novell must be glad that the deals done since theyve been holding up a few things until the acquisition was complete. Its not that there was any doubt that the deal was going to go through, but they can now start moving forward," he said.
Looking ahead, Claybrook expected some challenges for Novell on the Linux adoption front. "Its clear that Novell will basically become a Linux company, now they have the problem of figuring out how to get older NetWare customers to move to Linux."
Still, "Novell had to do something to stem the tide of NetWare people who were moving to Windows. They had to do something since 10 percent of their installed base was moving to Windows a year. I think they have a real story to tell their customers now, but they must show parallel programs for NetWare customers to keep them" until theyre ready to upgrade to Linux," Claybrook said.
Now that the SUSE deal is sealed, Novell also announced an indemnification program designed to provide protection against Linux copyright law suits. Currently, this program only covers customers of SUSE Linux Enterprise Server 8 that sign an additional contract with Novell.
Click here to read more about Novells indemnification program as well as similar programs from other Linux vendors.
At the same time, CEO Messman asserted that Novell has "unique legal rights" to Unix that "provide enterprise customers with one more reason to include Linux in their information technology plans."
Specifically, besides its previous Unix copyright claims, Novell declared that it has the right to authorize its customers to use Unix technology, claimed by The SCO Group of Lindon, Utah, in their internal business operations.
Novell officials asserted that the company has "rights to take action on behalf of SCO under legacy UNIX SVRX licenses pursuant to the Asset Purchase Agreement between SCO and Novell."
According to the company, even if the SCO assertion that Unix intellectual property is within Linux are upheld, Novell Linux users covered by its program would still be protected against SCOs copyright claims.
Indeed, as Claybrook noted, Novells protection may be even broader than that. By covering copyright claims "made by third parties," and not just SCO, Claybrook opined that "Novell seems to have gone beyond HPs and Suns Linux indemnification programs."
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Steven J. Vaughan-Nichols is editor at large for Ziff Davis Enterprise. Prior to becoming a technology journalist, Vaughan-Nichols worked at NASA and the Department of Defense on numerous major technological projects. Since then, he's focused on covering the technology and business issues that make a real difference to the people in the industry.